Harper government keeping silent on spy case amid suggestions of rift with Washington

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The Harper government had a host of military and possibly commercial reasons for not blaming and shaming Russia in the aftermath of an embarrassing spy scandal involving a junior intelligence officer, a series of internal briefings suggest.

Sub.-Lt. Jeffrey Delisle arrives at provincial court in Halifax in March 2011. He's charged with communicating information to a foreign entity that could harm national interests. The case is adjourned until June. (Andrew Vaughan/Canadian Press)

The case of Sub-Lt. Jeffery Delisle, which exploded across the front pages in January, has largely disappeared into a black hole of secrecy and court-ordered silence that even a Wall Street Journal story failed to dislodge last spring.

The New York-based publication recently quoted U.S. intelligence sources saying Delisle's breach in communications secrets was roughly as big in volume as the notorious U.S. data loss to WikiLeaks.

Yet, the Harper government has remained mute, even in the face of suggestions the case caused a major rift with Washington.

Several sources within the government and the military say there was a vigorous debate within the halls of power about whether to call out the former Cold War adversary over Delisle, whose case has been adjourned until June 13 while his lawyer awaits security-washed documents.

A small cadre of cabinet ministers, notably Defence Minister Peter MacKay, argued for a measured, nuanced response to the crisis, which continues to have the potential to cause serious strains among allies, said the sources.

The Conservatives have previously shown no hesitation to paint Moscow as a bogey man, especially when it comes to justifying their military build-up in the Arctic.

But to alienate Russia over the alleged betrayal by a navy sub-lieutenant, potentially setting off tit-for-tat diplomatic expulsions, had more downsides than upsides, sources and briefing documents suggest.

Arctic disputes yield opportunities

The rivalry over Arctic boundaries, which is expected to come to a head next year with a United Nations submission, is being driven by the suggestion of mineral wealth under the polar sea.

The Department of Foreign Affairs and National Defence have repeatedly pointed out, in internal briefing reports, that Russian interest in the Arctic is weighted towards oil and gas exploration – something that Canada can appreciate and possibly exploit.

"Indeed, these commonalities could yield political and commercial opportunities for co-operation between Moscow and Ottawa," said a July 12, 2011 briefing note prepared for MacKay.

"From a defence perspective, in spite of disagreements over Russian (Long Range Aviation) flights, there is mutual interest with regard to co-operation in (search-and-rescue) and Arctic domain awareness. Defence is continuing to explore the potential for further co-operation with Russia in these fields."

The note was written as security services investigated Delisle's alleged treachery.

Among the more sensitive areas of mutual co-operation is an international counter-terrorism exercise known as Vigilant Eagle.

The manoeuvres, which began in 2008, see NORAD and the Russian air force practise how to handle a hijacked airliner in international airspace. Tension over Russia's intervention in Georgia cancelled the 2009 event, but at the time of Delisle's arrest plans were already well advanced for Canada's participation in the 2012 edition.

Russian co-operation in the Arctic and elsewhere was paramount to Canada's interests, as well as Moscow's ability to influence events in potential global flashpoints such as Iran and North Korea, MacKay reportedly argued with his colleagues.

Cooler heads prevailed

The government's initial reaction was to go public with the allegations, but sources said cooler heads pointed out that such a reaction would complicate relations with the erstwhile ally, which has been engaged in increasingly aggressive spy operations.

Defence and intelligence experts have said there is growing exasperation with Russia.

"As you know, about a year ago, a British minister complained publicly about Russian espionage, the scale of it and the intensity of it and the aggressiveness," said Wesley Wark, an expert at the University of Ottawa. "He asked the question: What are you doing? And warned them to scale it back because you're causing us problems in terms of us pursuing other legitimate targets."

Britain has been embroiled in a number of Russian espionage cases over the last few years, including recent allegations that a 26-year-old woman, Ekaterina "Katia" Zatuliveter, working for a Liberal Democrat MP, was a spy. She was accused of seducing 65-year-old Mike Hancock in a classic "honey trap" operation.

Sources in the Delisle case say money was the motive.

He is charged under a section of the Security of Information Act with communicating information to a foreign entity that could harm national interests.

The RCMP have said the charges against Delisle mark the first time anyone has been charged under that section of the act.